CAN THE LAW STOP BIG TECH FROM GETTING TOO BIG

MATT ADAMS

The 21st century has been defined by technological advances. As we enter its third decade, the century has been marked

by events such as the dotcom bubble, the invention of

Facebook and the iPhone, and significant developments in e-commerce and digital communication. The transition to living in the digital world has been further accelerated by the pandemic forcing us to move to living our lives through zoom meetings and Teams or Slack messages. Much of this progress has been welcomed. Many consumers today cannot envision how they lived their lives without

the limitless access to knowledge and communication they now have on the device in their hand or in their pocket.

Technological advancements also encourage innovation and market competition, constantly presenting new and improved products and services into the hands of consumers.

However, this rapid advancement has culminated in select

tech companies dominating the market, and engaging in anti-competitive and unfair conduct aimed at suppressing market competition. This has presented a challenge for regulators who by even normal standards struggle to keep up with change. This article explores the ways in which Big Tech is doing this, and what, if anything, regulators can do about it.

The case against the Big 5 In recent years five of the Big Tech companies: Google, Apple, Amazon, Meta (formerly Facebook), and Microsoft,

have drawn scrutiny due to claims of anti-competitive other legislators around the world pay special attention and consider what action they may take.

Concerns have been raised that these companies are displaying anti-competitive behavior and even exploiting monopolies. This has led to growing calls for anti-trust law to step in to stop these practices and potentially even force

the breaking up of these companies. Apple has drawn criticism for practices surrounding its app store and access to its operating system. Any app used on an Apple device must be purchased through its own app store and comply with Apple’s rules.Uploading apps also need approval to be published on the App Store. This practice led to a recent case between Apple and Epic Games (the creators of the video game Fortnite). Epic Games claimed that Apple’s App Store requirements were unfair, and it was anti-competitive practice for Apple to not allow any

other app stores on their roperating system. This problem is further exacerbated by the commission that Apple charges for developers to upload applications onto the App Store. Effectively, Apple has a complete monopoly over what Apple product users can download. Apple can also charge a significantly higher rate compared to Android app stores. Apple is able to charge these higher commissions with impunity as no other app facilitating functions can exist on an iPhone, or MacBook. Another practice Apple has been accused of is ‘Sherlocking’ where the premise of a third-party app will be copied by and

the flashlight function on iPhones. Apple co-opted a thirdparty’s flashlight app idea and created their own version, in essence taking the credit for and reaping the benefit of another party’s idea. This is not a unique practice to Apple. However, this essentially destroys competitors whose only

access to Apple users is through the Apple App Store. A similar claim has been made against Amazon, which controls so much of the online marketplace

that many online sellers are solely dependent

on the platform to sell their products. There

have been complaints that the platform

disadvantages third-party sellers, as they claim Amazon’s algorithm favours Amazon’s own imitation products,

similar to the above allegations against Apple for ‘Sherlocking’. Further, there has been controversy over a policy

which required sellers using Amazon to not sell their product elsewhere for a lower

price. Amazon claimed this was to protect

its consumers and ensure they received

the lowest price. However, this

policy effectively acted to stop

competitors competing with the platform.

Meanwhile Microsoft has drawn criticism over its latest acquisition of Activision, one of the largest video game producers in the world. This alongside Microsoft’s large share of the video game industry means there is potential for it to now monopolise the industry. This is not the first time the company has drawn attention from anti-trust regulators. In the late 90s and early 2000s there was concerns about the

dominance of its operating system, Windows. However, a deal was made with regulators to ensure that third-parties had access to their system.

Another recent announcement by a tech giant has worried regulators. The change in name of Facebook to Meta, signifying a change in direction for the company to focusing on the ‘Metaverse’ raised concerns that this may lead to a

monopoly. In recent years, the company has consolidated its

position in the social media market with a strategy of buying rather than competing, which saw them acquire Instagram and WhatsApp. As the company transitions to the Metaverse they have changed their focus towards virtual reality technology, buying five AV/VR companies in the last year. Google has also not escaped scrutiny. The company has received much of the same criticism as the other big tech companies. From dominating internet searches, it has expanded to phone operating systems, online payment services (Google Pay), and the smart devices that are embedded in our homes.

What the law can and should do

It is important to note that being a big successful company does not automatically make a company in breach of anti-

trust laws. Neither is being successful across multiple sectors. In fact, many people enjoy the interconnectedness

and convenience that these companies bring, such as being able to connect their phone, their laptop, music, banking, and home all together. However, imagine a world such as what could have happened if in the early 2000s Microsoft had been allowed to develop

its operating system Windows so that consumers could only use its web browser Internet Explorer, its own internet

search engine Bing, and its own email platform Outlook. This would provide very little choice to consumers, in light

of the fact that almost the entire market uses Windows, where it doesn’t use Apple iOS). Anti-trust law is a good example of how democratic principles are embedded into the law. Much like governments, people want companies to allow individuals freedom and not to act

as an autocratic leader by limiting their ability to choose. The above scenario is not too far from what we see currently

from the Big 5. Consider that many of these tech companies also have their own payment systems or app stores. As is the

case with Apple, they become the only way to access their

platform, it prevents any competition and harms consumers.

The lack of regulation of Big Tech market monopolies also becomes an issue when these companies become so large that third parties develop a reliance on them. Consumers rely on Facebook and Google to find their news, online retailers rely on Amazon’s marketplace to sell their goods, and most computer operating systems are either Windows or iOS, giving consumers only two choices in operating systems. While it is not illegal to be a monopoly or to be a big successful company, it is illegal to take advantage of this monopoly and to crush competitors. There are examples of these companies

using their monopoly and control to destroy competition and/ or threats.

A recent experience in Australia has shown that Big Tech is not afraid to retaliate. When the federal government floated the idea of a payment system for news used on platforms

such as Facebook, the company responded by removing all news pages (as well as some non-news but still vital pages) from its platform. This left many people vulnerable as they

relied on receiving information through Facebook. While Facebook’s response may have been successful in forcing a resolution with the Australian government at the time, it further adds to the need for broader action to be taken.

What are the legal options for regulating Big Tech? If legislators can overcome this hostile environment, there are legal avenues. One of the more extreme options is breaking up the big tech companies. For example, there have been calls to reverse past acquisitions such as Instagram and WhatsApp in the case of Meta, or prevent purchases such as in the case of Microsoft acquiring Activision. But this could go as far as forcing companies which span multiple services and sectors such as Amazon and Google to split in to two or more different companies. This action would be unpopular as well as unlikely.

A more realistic solution such as what is being discussed by the US congress currently is a change in regulation to target issues specific to these tech companies. Legislation targeting specifically the exclusivity of tech stores and preferential tactics in algorithms have been proposed. Similar requirements were made of Microsoft in the early 2000s.What now what may be required is that these requirements are formalized and cemented in legislation. This will likely be an ongoing discussion in the US congress and among legislators across the world, including Australia, signifying what may be a resurgence in anti-trust law.

Technology improves the lives of the many individuals, organisations and governments that use it. However, companies such as Microsoft, Apple, Amazon, and Google, all revolutionary in their products and services at the time of

creation, are giants who have a worrying degree of control over the activities of their competitors. Clearly, each company employs different strategies to maintain their positions at the top of the tech food chain, and they are not afraid of coercion,

retaliation, and suppression of the products or service that

threaten their monopoly. But legislation and regulation can prevent these companies from engaging in unfair conduct against their smaller yet just as innovative vendors. Legislators around the world have the power to regulate such behaviour, and they must act to enshrine protections

regarding competition law. Only this will keep national and global economies healthy and democratic.

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